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Purchasing Development - Assignment Example

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The author of this assignment "Purchasing Development" casts light on the role of the purchasing system as an integrated part of the overall development of an organizational strategy. According to Jones, purchasing systems refer to the procedures set to procure materials, services, and supplies…
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Download file to see previous pages For instance, a general purpose purchasing system might procure materials the way we want it to but doesn’t give us a receipt of each individual transaction (assuming we need receipts for each and every transaction). Design systems, on the other hand, are specifically designed from business to business and provide all functionalities that are needed for a successful purchasing function. It is necessary that procurement systems be integrated into all processes and departments of an organization. This would save the organization a lot of time and money as whenever anyone would require something, all he needs to do is send a procurement request to the purchasing department rather than waiting for the purchasing department to figure out for itself when inventory count goes down and wait for them to reorder. Sometimes there might be commercial issues arising as a result of a change in organizational business plans. For instance, our organization might aim to cut down on its costs as a way to maximize profits. It might plan to do so by purchasing raw materials and other supplies at a lower cost than usual. The procurement system here would need to consider whether switching suppliers to one offering a lower cost would still mean that the supplies are of the same quality. It would also need to consider whether the supplier would be able to deliver on time and not back out at the very last moment and leave us doomed. Such decisions need to be taken by the procurement department bearing the risk that a new supplier might default at any time! James (2009) in his book Buying Complex Systems stresses how it is very necessary to properly define the objectives of the purchasing operations and make sure they support the strategic objectives of the company as a whole. For instance, if an organization aims to differentiate its product by offering high-quality products and on the other hand the purchasing operation aims to save on money and therefore purchases low-quality raw material then definitely the overall aim of delivering high-quality products won’t be met. The objectives of the purchasing operations need to be in line with the organization’s strategy if the organization wants to prosper.
I’m going to discuss the purchase operational system of Agha’s Supermarket. The mart is located in the posh locality of Clifton and caters to thousands of people on a daily basis. The store is divided into many sections like crockery and cutlery, food items, vegetables, etc. The purchase manager is responsible for making purchases on an overall basis. The purchase manager has a team of people, each of whom is sent out by him to different sections of the market to see the stock requirements. The team surveys the section heads every second day and pens down the stock requirement on a piece of paper. The entire team meets the purchase operations manager the next and report to him about the stock requirement. The purchasing manager then places purchase orders and goods are obtained by the company the very next day. The current system isn’t ideal enough to deal with unexpected demand fluctuations. Miscalculations might be made by section heads while ordering stock and in the meanwhile, stock-outs may be experienced leading to nil sales and loss of valuable market reputation. ...Download file to see next pagesRead More
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